Dawson Forest Products, Inc

Executive Summary

There is growing concern globally on the green house effect caused by carbon dioxide emission. Biomass conversation is a way to create a net decrease in overall carbon atmospheric pools (paragraph 1, page 2) and contribute to clear energy. Dawson Forest Products intends to implement biomass conversation project to meet the current environmental requirement from Canadian government, but the associate capital cost for installation is very high. Through payback period calculation, the case study shows that Dawson Forest Products have an opportunity to gain the investment back within ten years. The recommendation is to continue the project and watch out the expense closely to ensure the positive return on the investment.

Issue Identification

Dawson Forest Products produce lumber used for residential and commercial housing. As wood residues are the byproducts of the lumber production process, the business can become self-contained by utilizing those waste residues to generate energy for mill production, which is the purpose of biomass conversion project. Once implemented, the manufacturing plant would enhance efficiency, reduce the natural gas use and the associated greenhouse gas emission. It seems win-win solution, but with the consideration of huge capital investment and extended project duration, this project may not have good return on investment. It is time to decide whether to continue or cancel the project.

Root Cause Analysis

The benefit of this project is apparent as it contributes to both air pollution reduction and energy save at the same time. The saving from below aspects:

1. Profit gain from sale of carbon offset: the profit would be $178, 910 CAD per year based on 10,545 ton CO2 in this case study;

2. Saving